The situation unfolding in the Strait of Hormuz over the past six weeks is sobering. Tankers idling, supply chains strained and energy markets in turmoil. The ongoing conflict has triggered what many analysts are calling the biggest global energy shock since the 1970s, cutting off around 20% of the world’s oil and liquefied natural gas (LNG) supply.
Brent crude prices have climbed above US$100 to US$110 a barrel. Closer to home, with nearly half of Malaysia’s oil supply passing through these critical waters, the impact is already being felt at petrol stations and in boardrooms across the country.
I was in Kuala Lumpur recently and you could sense the unease. Some petrol stations have reportedly run out of petrol and diesel, and business owners were already recalculating their margins.
Malaysians pride ourselves on being a net energy exporter, thanks in large part to PETRONAS. Yet this crisis lays bare the uncomfortable realities of the energy trilemma. How do we ensure security when supplies are disrupted, and keep energy affordable for families and businesses, while still meeting our sustainability commitments? The answer, I believe, lies in using this shock as the catalyst, speeding up the National Energy Transition Roadmap (NETR) and embedding ESG thinking deeper into our corporate DNA.
Catalyst for NETR acceleration
Launched with clear ambition, the NETR sets us on course for net-zero greenhouse gas emissions as early as 2050.
It targets a dramatic increase in renewable energy to 70% of installed capacity by 2050 (building on the interim 31% goal we’re already closing in on by 2025), a near-complete phase-out of coal and major advances across six practical levers.
These include energy efficiency, renewable energy, hydrogen, bioenergy, green mobility, and carbon capture, utilisation and storage (CCUS).
The 10 flagship projects under these levers are poised to draw billions in investment, lifting green gross domestic product (GDP) from RM25bil today to RM220bil by 2050, and create tens of thousands of jobs in the coming years. Projections reach 310,000 by mid-century, but good roadmaps need real momentum behind them.
Skyrocketing fossil fuel prices are making the economics of renewables look far more attractive overnight. I have spoken to energy executives who tell me the numbers have flipped dramatically in just the past few weeks.
This is the moment for PETRONAS and others to double down on diversification, not just talking about it but investing boldly, as we have already seen with the new hybrid hydro floating solar and green hydrogen hub in Terengganu and Gentari’s push into offshore wind and solar.
Policymakers, too, can accelerate approvals and incentives under NETR to turn ambition into action before the window narrows again.
Turn volatility into ESG leadership
For companies listed on Bursa Malaysia, energy price volatility is not just a cost headache. It is a chance to step up as ESG leaders. Many are already preparing for the new reality of mandatory IFRS S2 climate disclosures, with the largest issuers (market cap above RM2bil) already reporting from 2025 and the rest of the Main Market following in 2026.
Those that move proactively by strengthening their climate risk management, improving Scope 3 visibility deep into their supply chains and building credible transition plans will find themselves better placed to access sustainable financing from both local banks and international partners.
From what I have observed analysing ESG performance across Asia, the leaders are those who treat these requirements as opportunities rather than compliance checkboxes. They use robust data to set meaningful targets and communicate their progress transparently.
Take the palm oil sector, for example. Many listed planters are already mapping their upstream emissions because European buyers are asking for it under European Union Deforestation Regulation (EUDR) rules. Or look at manufacturing and logistics companies that have started piloting green fleet conversions.
The payoffs are stronger investor confidence, easier access to green bonds and loans and genuine resilience against future shocks. Companies that hesitate may find themselves locked out of capital markets that increasingly reward real transition action.
Empower businesses with ESG tech
Malaysian companies are feeling the squeeze from multiple directions. Subsidy rationalisation, rising input costs and pressure from global buyers demanding detailed emissions data on Scope 3 are all part of the new normal.
Add in potential Cross Border Adjustment Mechanism (CBAM) costs if we export steel or cement to Europe or rising carbon tax in neighbouring countries like Singapore, many businesses understandably feel overwhelmed. Here’s where smart technology makes a genuine difference. Asia’s leading ESG data and technology platforms today help companies measure their environmental impact, generate standard-aligned sustainability reports, and manage supply chain ESG.
These digital ESG tools help companies track their environmental impact without having to engage costly consultancy services. A furniture maker in Sungai Petani can now upload supplier invoices and get instant Scope 3 estimates. A food processor in Kedah can benchmark its energy use against peers and spot efficiency savings.
It turns what could be a burden into a competitive edge, helping businesses make sustainability work for their bottom line, through gaining prioritised procurement in the public and private sectors, tender success, and better risk management, as well as making them more bankable when they walk into a branch asking for the Low Carbon Transition Facility or other green financing. Banks are increasingly favouring companies that can prove their credentials, and digital platforms level the playing field for businesses new to sustainability.
Geopolitics has a funny way of reminding us what really matters. This Iran-induced energy shock is not merely a temporary disruption. I see it as a clear signal that delaying our energy transition carries real risks across the economic, social and environmental front.
Malaysia has everything it needs to lead: rich natural resources, a solid policy foundation in the NETR and a business community ready to innovate. Acting decisively now will enable the country’s listed companies and SMEs alike to not only weather this storm, but position themselves at the forefront of the sustainable economy of tomorrow.
The window of opportunity is open. The old saying of never wasting a crisis has never been truer. Let’s make sure this one does not pass us by.
